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Bitcoin Looks Like a Faded Fad as Fed Goes All In on Rate Hikes - BLOOMBERG
(Bloomberg) -- What is Bitcoin for, exactly? While that’s been a tricky question to answer in years past, it’s safe to say that right now, it’s definitely not for preservation of wealth. The shiny new thing is down 60% YTD against the grimy old thing (aka the USD). More losses may follow as the Fed hikes, with the bank’s next installment due midweek.
Bitcoin’s collapse makes for a decent new entry in the tulip mania archives. Since peaking last November, it’s down 73%. That’s quite a train wreck. With delicious irony, the same week it registered a record, the Fed warned of perilous plunges for risky assets should the economy take a turn for the worse. As the US central bank responded belatedly to inflation, Bitcoin tanked.
In commodityland, my engagement with Bitcoin is derivative and I don’t fully understand its pricing dynamics (does anyone?). So I check to see how its performing vis-a-vis gold, an old haven that some crypto evangelists used to say was out of date. It turns out that neither are great when the Fed really means business. But while gold’s prospects look merely dim, Bitcoin’s look absolutely dire and a four-figure price isn’t out of the question.
This was a post on Bloomberg’s Markets Live blog. The observations are those of the blogger and not intended as investment advice. For more markets analysis, go to MLIV.
